Orlando-area home prices show biggest rise in years

Mortgage meltdown

But bank-owned foreclosures, short sales make up 70% of February closings

March 19, 2010|By Mary Shanklin, Orlando Sentinel

Following a 14 percent tumble in January, Orlando existing-home prices increased 7.1 percent in February — the biggest one-month gain in more than 6 1/2 years.

The median price of all resales in the core Orlando market in February was $109,200, up from $102,000 the month before but down by more than 26 percent from a year earlier, according to a report released Friday by the Orlando Regional Realtor Association.

Orlando agent Linda Barresi of Sutton & Sutton Realty said she sees the Orlando market beginning to shift. For the first time in more than two years, her brokerage got an appraisal back that didn't say the market was in a downturn.

"We were shocked it didn't say ‘declining market' on the appraisal," Barresi said. "And we got an appraisal back this morning on a house in Maitland — and the appraisal came back $15,000 higher than the contract price. That might have been the first time in a year and a half or two years."

Median price is a volatile month-to-month statistic, jumping around in good times and bad depending on the season and the types of homes sold in a given month. Still, the last time the Orlando Realtors' median rose more than 7 percent in a single month was in June 2003, in the midst of the homebuying frenzy, when it jumped 7.5 percent to what was then a record-high $156,914.

Although home-loan interest rates continued to average less than 5 percent, and the April 30 contract deadline was nearing for buyers planning to claim a federal tax credit, the number of February sales was up "only" 39.7 percent, its smallest year-over-year increase since the same month last year.

But the number of new contracts was up 13 percent from the month before and 66 percent from a year ago, according to the Orlando Realtors' report, based on member sales of existing homes, most in Orange and Seminole counties.

"The new-contract statistic is an important indicator to consider in our current market," said the local association's chairman, Kathleen Gallagher McIver of Re/Max Town & Country Realty. "I expect activity in this category to continue to pick up into late spring, as buyers take advantage of the tax credit before its April 30 deadline."

Still, the local market continues to be driven by distress sales: 70 percent of the 1,847 closings in February were bank-owned foreclosures or short sales.

During the extended housing slump, the association has begun distinguishing between the prices paid for "normal" homes and those paid for distressed properties: It reported that, in February, the median price for conventional sales was $168,100, a slight increase over January; the median price for bank-owned sales was $71,000, also up slightly from January; but the median for short sales, which involve owners selling a property selling for less than what's owed on the mortgage, fell from $115,000 in January to $105,000.

"You know what we call it here at the office? The wild, wild West," she said. "Everybody is making their own laws and rules. We have another couple of years of this, and then we climb out.

"And we won't even talk about the condo market."

Orlando had one of the hardest-hit condo markets in the nation when the housing bubble burst. The area led the U.S. in converting apartments into condominiums in 2005, and the resulting oversupply helped force down prices in recent years. The Florida Association of Realtors reported that, in January, the median price for a condo in Orlando was $49,700, or about half the statewide median.

Local condominium sales last month were up 11 percent from January and 116 percent from February 2009, the Orlando Realtors said. More than half of those sales involved units that fetched $50,000 or less.

Unclear is whether sales increases can be sustained in coming months, after the federal tax credit's scheduled expiration. Another factor that could affect a recovery is supply: In February, an increased number of properties hit the market, with 4,586 new listings — up 7 percent from January.

That left 16,051 homes available for purchase through the Realtors' multiple-listing service — or 28 percent fewer properties than a year ago.

With distress sales dominating the market, investors are still flocking to Orlando.

"Cash buyers are out there, from Canada and Great Britain," Barresi said. "I'm meeting a guy coming in this afternoon from Vegas."